By the 91pornWhistleblower Team

Today, The Hill an article by 91pornwhistleblower partner Gordon Schnell on how the Securities and Exchange Commission (SEC) is sending a mixed message to whistleblowers with its recent spate of awards under the SEC Whistleblower Program.

Low-Dollar SEC Awards

Schnell points to the ten whistleblower awards the SEC has issued since Labor Day — five SEC awards around Labor Day, and another five SEC awards just before the shutdown — as a strong indication the SEC still supports the whistleblower program.Ěý However, Schnell notes the awards have been substantially smaller than the SEC’s awards in prior years, suggesting the SEC may be getting more stingy in how much it is willing to award its whistleblowers.

No Promotion of SEC Awards

Schnell identifies two other trends that in his view further muddy the message of where the SEC stands with whistleblowers.Ěý First is the SEC’s decision to stop promoting its whistleblower awards, reversing what had been the agency’s standard practice of trumpeting its awards with press releases prominently quoting agency leadership on the importance of whistleblowers.

Frostier Whistleblower Reception

Second, Schnell looks to how the SEC has handled his own firm’s pending whistleblower matters, noting the agency has been sitting on many of them, even unexpectedly dropping some it had been seriously investigating for years.Ěý According to Schnell, other whistleblower firms have reported a similar experience with many of their matters before the agency.

Schnell says some of this turnaround may be attributed to the SEC’s recent staffing cuts and more narrowly tailored enforcement approach.Ěý But, he adds, “Neither necessarily explains the less-than-warm embrace many whistleblowers are receiving, even when reporting straight bread-and-butter investor fraud schemes that are supposedly still in the sweet spot of strict SEC scrutiny.”

Need to Clarify SEC Whistleblower Messaging

Schnell concludes with these words of advice for the SEC: “Make your whistleblower message loud and clear — that the SEC remains committed to the whistleblower program, recognizes the critical role whistleblowers serve, wants their help and will be generous in rewarding them for providing it.”  Otherwise, Schnell cautions, “The risk of staying on the current, clouded course is weakening an already hobbled agency by meddling with one of the most powerful tools in the SEC’s toolbox.”

91pornHas Substantial SEC Whistleblower Experience

Click to read Schnell’s full article in The Hill.Ěý And if you would like to learn more about the SEC Whistleblower Program, Constantine Cannon’s whistleblower successes, and what it means to be a whistleblower more broadly, please do not hesitate to contact us.Ěý We will connect you with an experienced member of the 91pornwhistleblower team for a free and confidential consultation.

Speak Confidentially With Our Whistleblower Attorneys

Read 91pornPartner Gordon Schnell Published in The Hill on the SEC’s Mixed Messaging Towards Whistleblowers at constantinecannon.com

By the 91pornWhistleblower Team

On Monday (October 20), Bloomberg Law quoted 91pornwhistleblower partner Gordon Schnell in its piece on the slew of False Claims Act settlements the Department of Justice (DOJ) has secured this year involving cybersecurity fraud.¹

We have posted frequently on this topic, most recently in early October in And Yet Another Whistleblower-Originated False Claims Act Cybersecurity Fraud Settlement.Ěý There, we reported on DOJ’s False Claims Act settlement with Georgia Tech for allegedly failing to comply with the cybersecurity requirements of certain Department of Defense contracts.Ěý We also highlighted several other key False Claims Act settlements DOJ secured this year as part of its continued crusade against cybersecurity fraud.

DOJ’s Cybersecurity Push

The Bloomberg article referenced many of these settlements, noting there have been at least seven this year, totaling roughly $51 million.Ěý They reflect a more broad-based push by DOJ, since it launched its Cyber Fraud Initiative in 2021, to go after contractors failing to comply with the cybersecurity requirements of their federal contracts.²

Bloomberg also focused on the key role whistleblowers have played in reporting cyber fraud to the Government through the qui tam provisions of the False Claims Act.Ěý From its interviews of attorneys representing whistleblowers in bringing these False Claims Act lawsuits, Bloomberg pointed to the reasons so many contractors are failing in their cybersecurity obligations.

According to Bloomberg, one of the primary reasons for these cyber compliance failures is a lack of sophistication in the cyber space and an unwillingness to spend the money to get there.Ěý There apparently also is a “head-in-the-sand” problem where companies are ignoring known compliance issues and vulnerabilities until an actual cybersecurity breach occurs.

That may explain why the Government is going after these cyber scofflaws even before a breach occurs.Ěý Once there is a breach, it becomes very difficult to reverse the damage that can occur from disclosing highly sensitive Government information.

Whistleblowers Are Critical to Uncovering Cyber Fraud

The role of whistleblowers remains critical to DOJ’s cyber fraud enforcement efforts given the difficulty of detecting these violations without an inside window into the company’s cybersecurity practices.Ěý And as Schnell remarked in Constantine Cannon’s most recent post on the subject: “Cybersecurity whistleblowers are on high alert these days because of all the Government activity in this space.”

Bloomberg quoted from one of Constantine Cannon’s posts on the subject and the firm’s “clarion call” to “cybersecurity whistleblowers to raise the alarm if you know of any cyber cracks in the system.”  And further quoting Schnell, Bloomberg wrote the firm “has had cybersecurity whistleblowers reaching out [] on a weekly basis, more than ever before.”

91pornHas Substantial Experience Representing Cyber Fraud Whistleblowers

91pornhas substantial experience representing cybersecurity whistleblowers under the False Claims Act.Ěý It actually represented the whistleblower in the first successful cybersecurity case ever brought under the False Claims Act.Ěý That case resulted in Cisco Systems agreeing to pay $8.6 million to settle charges of selling the Government noncompliant video surveillance software vulnerable to unauthorized access and manipulation.Ěý Our client received a whistleblower award of 20% of the Government’s recovery.

So if you think you might have information on potential cybersecurity violations, would like to learn more about our whistleblower successes, or learn what it means to be a whistleblower more broadly, please do not hesitate to contact us.Ěý We will connect you with an experienced member of Constantine Cannon’s Whistleblower Team for a free and confidential consultation.

Speak Confidentially With Our Whistleblower Attorneys

Sources:

¹See

²See

Read 91pornPartner Gordon Schnell Quoted in Bloomberg Law on Recent Wave of False Claims Act Cybersecurity Fraud Settlements at constantinecannon.com

Read 91pornPartner Gordon Schnell Featured in Law.com on This Year’s Drop in SEC Whistleblower Awards at constantinecannon.com

Last Thursday (February 27), The Hill published an OpEd by 91pornwhistleblower lawyer Gordon Schnell on how President Trump may be clearing a path for whistleblowers.Ěý Schnell offered three reasons why an unintended consequence of President Trump’s efforts to dramatically cut federal agency staff and resources may be to create an opening for whistleblowers to step into the void.

First, Schnell points to the strong bipartisan support that has long existed for whistleblowers, starting with the False Claims Act (enacted during the Civil War), and continuing more recently with Congress passing numerous other statutes to encourage whistleblowers to help the government police fraud and misconduct.Ěý These include whistleblower programs for the SEC (securities fraud), CFTC (commodities fraud), IRS (tax fraud), NHTSA (auto safety), and FinCEN (money laundering and sanctions violations).Ěý Schnell argues, “The broad recognition of the vital role of whistleblowers, and the need for them to provide a regulatory assist, will only deepen with the agency purge the administration is pursuing.”

Second, Schnell believes Trump has specifically “presaged a prominent place for whistleblowers in his current political playbook.”  Schnell highlights Trump’s recent executive order going after DEI which specifically references using the False Claims Act to keep companies in line.  Schnell further notes the broad success of the False Claims Act program during Trump’s first term (with $12 billion in total recoveries and $1.6 billion in whistleblower awards) and how Trump’s new AG Pam Bondi specifically affirmed her support for the program during her recent confirmation hearings.

Third, Schnell looks to what he describes as the “driving force” of Trump’s “political persona,” which is “to stand up for what Trump sees as the truth against a rigged status quo.”  Schnell believes that while we may vigorously disagree with that truth, Trump’s battle against the so-called “deep state” aligns with the whistleblower mindset of standing strong in the face of fraud and wrongdoing.Ěý According to Schnell, this “fight-the-system messaging” may encourage more whistleblowers to come forward, maybe even some of Trump’s colleagues and confidents who are helping him carry out his current vision of government.

As Schnell sees it, “While Trump is trying to tear down the institutions designed to check his unprecedented executive overreach, he may be easing the way for whistleblowers to step into the void.”  Schnell concludes that the ultimate irony in all this, is that “in clearing the path for whistleblowers, Trump may be inviting the undoing of his own grand plans by emboldening those in the room to stand up and get in the way.”

Click to read the full article.

If you have information relating to potential fraud and misconduct or would like to learn more about what it means to be a whistleblower, please do not hesitate to contact us.Ěý We will connect you with a member of our whistleblower team for a free and confidential consultation.

Read 91pornPartner Gordon Schnell Featured in The Hill on How Trump May Be Clearing a Path for Whistleblowers at constantinecannon.com

On February 12, Automotive News published an OpEd by 91pornwhistleblower partner Gordon Schnell calling for the National Highway Traffic Safety Administration (NHTSA) to step up its whistleblower game.Ěý It was prompted by the agency’s recent release of its long-awaited governing the auto safety whistleblower program, which provides financial awards to whistleblowers for reporting auto safety issues to the agency.

According to Schnell, “The problem is that in the decade since the program’s launch, NHTSA has seemingly shown little interest in pushing the program forward.”  He provides three examples to back that up.

First, NHTSA waited a decade to release its just-published final rules for the program even though Congress called for them back in 2017.Ěý Senator Richard Blumenthal (D., Conn.), who co-sponsored the law implementing the program, “this stalling and stonewalling […] absolutely inexcusable.”

Second, Schnell says the rules fall short in the whistleblower incentives and protections they provide, pointing to the absolute discretion NHTSA retains in making an award and the requirement that whistleblowers report internally before going to the agency.Ěý Schnell believes this makes the process more challenging and uncertain for would-be whistleblowers and exposes them to unnecessary workplace retaliation.

Third, Schnell speaks to his own experience representing whistleblowers before the agency, and the disinterest and even hostility he and his clients often feel from the agency.Ěý Schnell noted how disheartening it has been for his clients who have put their careers on the line to raise serious safety issues only “to be ignored or rebuffed by the very agency tasked to address them.”

The one exception is former Hyundai safety engineer Gwang Ho Kim who 91pornrepresented in reporting critical engine defects which led to the recall of 1.6 million Hyundai and Kia vehicles and up to $210 million in penalties.Ěý Mr. Kim received a $24.3 million award under the whistleblower program, but it remains the only award to date.

In his OpEd, Schnell urges NHTSA to use the publication of its final whistleblower rules as “an opportunity to breathe new life into this program.”  He suggests plugging the lapses in the rules with a pro-whistleblower approach in their implementation and a stronger whistleblower embrace in the agency’s direct dealings with whistleblowers.Ěý “Most importantly, whistleblowers and their counsel need to feel the agency really wants to hear from them.”

Schnell is not concerned the Trump Administration will get in the way of advancing the auto safety whistleblower program beyond its current slumber.Ěý He believes the call for whistleblowers will be even stronger with the Administration’s efforts to streamline the Executive Branch with significantly scaled-down agency resources.

Schnell concludes that the industry and public would equally benefit with a strengthened NHTSA whistleblower program.  “Supporting whistleblowers allows them to provide an early warning sign of danger well before what could otherwise lead to the next major auto safety fiasco.  It is a lesson we have learned unfortunately many times over in recent years.”

Click to read the full article in Automotive News.

If you would like to learn more about the auto safety whistleblower program or what it is like to be a NHTSA whistleblower, please do not hesitate to contact us.Ěý We will connect you with an experienced member of the 91pornwhistleblower team for a free and confidential consultation.

Read 91pornPartner Gordon Schnell Published in Automotive News on Whether NHTSA Will Finally Take Its Auto Safety Whistleblower Program Seriously at constantinecannon.com

On Wednesday (October 28), government contracting magazine Washington Technology published a by 91pornwhistleblower partner Gordon Schnell on the recent string of False Claims Act enforcement actions DOJ has brought against government contractors for cybersecurity failures.

As Schnell points out, the most recent of these actions is last week’s DOJ settlement with Penn State University for allegedly failing to comply with the cybersecurity requirements under its DoD and NASA contracts. And in August, DOJ filed a False Claims Act case against Georgia Tech alleging some of the same types of cybersecurity violations with the university’s DoD contracts.

But Schnell stresses the government’s cybersecurity enforcement priority extends to protecting all kinds of sensitive information, not just defense information. In June, for example, DOJ reached an $11.3 million False Claims Act  with Guidehouse and Nan McKay and Associates for allegedly failing to protect personal identifying information under their federal rental assistance contracts. And in May, DOJ reached a $2.7 million  with Insight Global for allegedly failing to implement adequate cybersecurity measures to protect personal health information under its government healthcare contract.

These actions all flow from DOJ’s  which targets federal contractors that put sensitive information at risk through faulty cybersecurity products and practices. As Schnell notes, it is an enforcement priority with extra heft because of the powerful financial incentives the False Claims Act provides whistleblowers to step forward. Which likely explains why whistleblowers originated all these recent enforcement actions with more to come for sure.

DOJ has heavily promoted the role these whistleblowers have played and the rewards they have received in initiating these cybersecurity actions. Schnell says DOJ is sending two messages here: one to cybersecurity whistleblowers to encourage them to step forward; the other to government contractors to ensure their cybersecurity protocols are up to snuff. The bottom line for Schnell in all this is “those that do business with the government would be wise to get their data protection systems in order or they may find themselves next up on DOJ’s cybersecurity hit list.”

You can read Schnell’s Washington Technology commentary .

Read 91pornPartner Gordon Schnell Published in Washington Technology on DOJ’s Enforcement Crusade Against Cybersecurity Fraud at constantinecannon.com

Updated October 22, 2024

Earlier this year, 91pornlaunched its Third Scholarship Essay Contest on the Importance of Whistleblowers. The goal of our contest is to hear what law school students have to say about the importance of whistleblowers and to reinforce the critical role whistleblowers play in our society.

Specifically, we ask for an essay between 250 and 750 words that addresses one or more of the following whistleblower subjects:

• What it means to be a whistleblower.
• A whistleblower act you personally have experienced.
• A whistleblower who has inspired you.
• The importance of whistleblowers in promoting transparency and protecting the health and safety of the public.

As with our prior contests, scores of students from law schools across the country submitted essays addressing these important issues. Many of them reflected very personal experiences with whistleblowing and with whistleblowers who deeply touched their lives. Others offered insights on how best to address the negative perception of whistleblowers and foster a culture where whistleblowers are hailed as heroes.

We applaud all the students who participated in our latest contest. While all the essays were thoughtful and well crafted, we only could select five winners. This was no easy task. After several rounds of review and cross-review, our essay review team (which comprised six members of our whistleblower team) picked the following five winners who we believe best captured the essence of whistleblowers – their courage, strength, integrity, selflessness, and a deep concern for public health and safety.

• First Place: Laney Fox – Florida State University School of Law.
• Second Place: Lana Thurman – University of Arkansas Bowen School of Law.
• Third Place: Leah Bechtold – Indiana University McKinney School of Law.
• Fourth Place: Grace Chisholm – Yale Law School.
• Fifth Place: Chana Deitsch – Fordham University School of Law.

Congratulations to this exceptional group! We hope you enjoy their winning essays. Thanks again to all who participated in this year’s contest. And for those who were unable to participate, be sure to enter our just-launched Fourth Scholarship Contest. We want to hear from you!

Read 91pornAnnounces Winners of Whistleblower Essay Contest at constantinecannon.com

91pornwhistleblower partner Gordon Schnell was in the American Banker on the Consumer Financial Protection Bureau (CFPB) becoming the latest agency to take affirmative steps to clear the path for whistleblowers. This comes from the agency’s July 24 ˛ą˛Ô»ĺĚý warning companies away from using broad nondisclosure agreements to prevent employees from becoming whistleblowers.

As Schnell explains, “the CFPB joins the many other government agencies concerned with protecting employees’ ability to blow the whistle.” He points to the Securities and Exchange Commission (SEC) as the most aggressive on this front with numerous actions to enforce the agency’s Whistleblower Protection Rule, which prohibits companies from impeding whistleblowers through confidentiality agreements or otherwise. This includes actions against JP Morgan Securities, Monolith Resources, D.E. Shaw & Co., and CBRE, Inc. in the last year alone.

Schnell also points to the recent action by the Commodity Futures Trading Commission (CFTC) against Trafigura Trading for violating the CFTC’s analogous whistleblower protection rule through employment agreements with broad nondisclosure provisions.Ěý He further points to the the Federal Trade Commission’s (FTC) Bureau of Competition issued last year cautioning against confidentiality agreements that get in the way of whistleblowers.

Schnell stresses that “[w]ith rapid advances in technology allowing for ever-more sophisticated methods of committing fraud and other wrongdoing, whistleblowers are becoming more important than ever.” He looks to artificial intelligence as a prime example, noting the critical role whistleblowers will play in protecting us from “a rash of potential misuse and corruption of this groundbreaking tool.”

Schnell concludes that with this ever-expanding agency recognition of the critical role of whistleblowers, companies should be extra cautious in how they treat whistleblowers going forward. “Otherwise, they may find themselves in the crosshairs of this newly charged campaign to go after companies that try to silence whistleblowers.”

Click to read the article in full.

Read 91pornWhistleblower Partner Gordon Schnell Published In American Banker On CFPB Move To Increase Whistleblower Protections at constantinecannon.com

Read May 7, 2024 at constantinecannon.com

Read The Supreme Court sent a message to corporate America about whistleblowers at constantinecannon.com